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By CBSNews.com staff CBSNews.com staff

August 7, 1998 / 10:43 AM
/ CBS MarketWatch

The strike against General Motors hit the nation's labor market hard in July, slowing job growth to 66,000, the Labor Department reported. It was the weakest job growth since the blizzard of January 1996.

he strike directly cost 133,600 manufacturing jobs in July, the government said. The auto industry alone lost 111,000 jobs.

But elsewhere in the economy, job growth remained robust. The unemployment rate was steady at 4.5 percent. Microsoft stock quote.

Average hourly earnings rose 3 cents or 0.2 percent to $12.79. The average workweek was unchanged at 34.6 hours.

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Economists were expecting job growth to slow significantly from the 196,000 added in June. Expectations ranged from 30,000 to 150,000 new jobs.

Economists are now divided about the future course of the economy. So far, consumer spending has propped up the economy while manufacturing falters. Some economists expect consumers to drag the producing sector back with steady demand; others believe the recent stock market slide will erode consumer confidence and subtract from the wealth effect that's been keeping spending high.

The Federal Open Market Committee meets in 11 days to consider policies to maintain the eight-year economic expansion. Few observers expect any changes in interest rates in August.

Although the strike and plant shutdowns began in early June, the full effects of the strike were not captured in the jobs data until July. The strike was settled last week and most of the workers have now returned to the payroll.

The strike affected the auto sector hardest, but it also cost jobs in primary metals, industrial machinery, rubber and apparel industries, the government said. Manufacturing was also hurt by job losses in electronic components and food products. All told, manufacturing shed 176,000 jobs, the most since the recession in October 1982.

The manufacturing sector has lost jobs five of the past six months as U.S. producers have been hit by a one-two punch from Asia due to weak demand and a strong dollar.

On the other hand, the service-producing sector added 229,000 jobs in July, with more than half of the gain in retail trade, especially restaurants. Gains in services were widespread, with finance, insurance and real estate gaining 32,000. Only a loss of 33,000 in the help supply industries were a negative.

Construction added 18,000 jobs, a sign the housing and construction boom is still in high gear.